Settlement of Audit Objections
Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor:
The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation
The safe custody of working papers is the responsibility of client, if kept at his premises
The working papers must be retained by an audit firm for a period of 10 years
Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required
The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation
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The risk of management fraud increases in the presence of :A. Frequent changes in supplies
B. Improved internal control system
C. Substantial increases in sales
D. Management incentive system based on sales done in a quarter
Concurrent audit is a part of:
A. internal check system
B. continuous audit
C. internal audit system
D. final audit
Which of the following controls would ensure that securities are not lost, stolen or diverted:
A. Establish physical barriers over investment securities
B. Maintain files of authorized signatures
C. Segregate investment approval form accounting and from custody of securities
D. All of the above
An auditor conducts a surprise check on the pay day (i.e.) the day wages and salaries are paid. The primary purpose of this audit procedures is:
A. To ensure that there are not ghost workers
B. To test procedures for distributing pay cheques
C. Both A and B
D. None of these
A company auditor can be removed by:
A. board of directors
B. managing director
C. any director
D. general meeting
Which one of the following primary assertions is satisfied when an auditor ensures that there are no unrecorded assets liabilities transactions or events or undisclosed items in the client financial records:
A. Valuation
B. Completeness
C. Existence
D. Rights and obligations
Following descriptions are the examples of substantive testing EXCEPT:
A. Test of account balances to verify the correctness of the amounts
B. Verification that an operating system and/or applications are configured appropriately to the companies needs
C. Review of minutes of directors; meetings and inquiry
D. Use of statistical sampling to determine the accuracy of financial statement figures
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